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Galaxy Theatre property in Atascadero facing foreclosure

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Posted at 7:02 PM, Feb 25, 2021
and last updated 2021-02-26 00:49:05-05

A retail center in Atascadero which includes the Galaxy Theatre is in danger of foreclosure.

A lending group from New York has initiated a foreclosure on the Colony Square Property located on El Camino Real. The City of Atascadero has since adopted a resolution emphasizing the importance of these businesses in the community.

Movie theaters have been hit especially hard by COVID-19 restrictions that have made it impossible for some to pay rent. The property owners in turn have also struggled to keep up with mortgage payments.

The Galaxy Theatre, which has been a staple in the community for the past decade, has only been open three days since March of last year.

"The closure of movie theaters is something that is having quite an impact certainly on the industry itself but on the public," said Frank Rimkus, Galaxy Theatres CEO.

Cinema Square LLC Property Owner Jeff Nelson says rent is $41,000 a month for the businesses including Que Pasa.

He says the restaurant has paid some while the theatre, which normally chips in more than 80% of that, has paid none.

"We made a loan payment in April and ever since then we had not had the rent revenue to make any loan payments," Nelson said.

The city's resolution states the lender is demanding repayment between $400,000 to $1.2 million above the amount of missed payments.

"We're suffering a serious detriment here for having worked with our tenants and that's just not right," Nelson said.

The window to apply for Shuttered Venues Federal Grant Funding opens soon which could potentially make up the missed loan and rent payments.

It's an option that the property owners and the city think should be taken into account before a foreclosure.

"You have somebody like Wells Fargo who is the master servicer of this loan and they're coming into a small town and threatening one of our small businesses and so we would like to stop that from happening, bring attention to this, and have everyone work together," said Heather Moreno, Mayor of Atascadero.

While the lender is prohibited under New York law from foreclosing on any New York property, this move could result in the only foreclosed property in San Luis Obispo County to date due to the pandemic.

"This is a David and Goliath story and they've thrown everything but the kitchen sink at us and it's been very challenging," Nelson said.

There's a court hearing in San Luis Obispo on April 20 to determine if the property owner will be replaced with a receiver.

KSBY News reached out to the lending parties involved but one declined to comment and we have not yet heard back from the other two.

Galaxy Theatres tells KSBY they don't know enough about the federal grant funding program yet to determine if they'll apply.